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Option Bulls Pounce On Twitter Inc (TWTR)

Twitter Inc has pared a portion of yesterday's losses, and option traders have taken notice

by 7/9/2014 2:25 PM
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Twitter Inc (NYSE:TWTR) has rallied 1.9% to $38.13 this afternoon, thanks to an earlier price-target hike from Pivotal Research. Of course, this comes just a day after the shares took a 7% drubbing. Despite looming resistance at the stock's 80-day moving average, speculators in today's options pits are gambling on an end-of-week win for the microblogging name.

Specifically, TWTR's most active option is the weekly 7/11 38.50-strike call, where contracts are largely being bought to open for a volume-weighted average price of $0.42. As such, the traders expect the stock to be sitting above $38.92 (strike plus VWAP) at this Friday's closing bell, when the weekly calls expire. Gains will rack up north of breakeven -- limited only by the price of the underlying -- while the maximum potential loss is capped at the initial premium paid, should Twitter Inc (NYSE:TWTR) be sitting below the strike at weekly options expiration. At last check, delta on the call was 0.40, denoting a 2-in-5 chance of an in-the-money finish this Friday afternoon.


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